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A Pause That Refreshes?

By Floyd Norris August 6, 2010 12:00 pmAugust 6, 2010 12:00 pm

The employment numbers today are not disastrous, but they are certainly not good.

It is now clear that the recovery paused this spring. I still hope that growth is poised to resume, and would point to the Institute of Survey Management numbers — based on polls of companies — as reasons for hope. In Saturday’s Off the Charts column, I point out that the surveys showed most American companies report rising levels of new business orders.

Those surveys also have an employment question. The manufacturing companies continue to report adding jobs. But the service companies are a lot more important, and earlier this year, when the employment reports looked good, those companies were not adding jobs. Now more say they are hiring than say they are cutting back, although not by a wide margin.

Corporate profits continue to come in very strong. Second-quarter earnings certainly show no pause in the economic recovery. One reason earnings are up may be a reluctance to hire, but sales are also rising. If sales stay as strong as they are, hiring will follow.

Let’s look at the job numbers over six months. From January through July, the private sector added 614,000 jobs, by far the best six-month period since the recession began.

Hitting that milestone, of averaging 100,000 private sector jobs a month for six months, took one year after (I think) the recession ended last July. Here are some comparable postrecession figures:

After the 2001 recession officially ended in November 2001, it took more than two years, until January 2004.

After the 1990-91 recession ended in March 1991, it took until December 1992 to get to that level of added jobs.

Those were, however, the so-called “jobless recoveries.” Jobs came back more rapidly after recessions in the 1970s and 1980s — even after the brief 1980 recession that was quickly followed by a double-dip that proved to be severe.

I had expected this recovery would be faster than it has been. I was wrong. But I do not think we are anywhere close to proving that a new downturn is imminent, or that the stimulus that was applied in 2009 failed to help the economy.

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